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October 6, 2023

Weekly Market Recap: October 6, 2023

TVL rose by ~$700k this week bringing TVL through the $5mm milestone as borrowers returned to rollover/extend their maturing loans in USDC and new borrow demand in ETH came to market. USDC auction rates declined slightly on a weighted average basis by around -25bps, while ETH rates were relatively unchanged.  

Variable Rate Markets

In the variable rate markets, USDC rates continue to rise, closing at 4.56% up from 3.85% the week prior according to the Aquanow DeFi Index.  On Aave, rates continue to see heightened intraday volatility as utilization continues to hover around the utilization kink -- evidence of a market seeing new equilibrium.

This past week was particularly notable given the fact that intraday borrow rates spiked above 10% four-out-of-five days this week . Week on week, Aave V3 saw a net increase of +5mm supply (+15mm supply vs +10mm  borrow), suggesting that while the signaling effect from these intraday spikes is choppy, they are effective in attracting new supply. These dynamics are early signs of a market in motion and it promises to be a rocky ride. In the meantime, lock in low fixed rates on Term while they last!  

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